Unspent funds at OUSD: What is the hold up?

In his column yesterday, East Bay Express columnist Robert Gammon wrote that outgoing schools chief Kimberly Statham “cheated nearly forty thousand children” out of more than $40 million in unspent funds. It was accompanied by a cute picture of Statham sitting on a pile of cash.

Gammon was referring to the surplus reported at last week’s board meeting as the district closed the books on the 2006-07 school year. He blamed much of it on Statham –more specifically, on her long weekend trips to visit her husband and son in Maryland (a critique of the soon-to-be-ex state administrator that we reported last week). 

Gammon raises an important issue — it is important for a school system to spend the money it has, especially when it has too little of it — but the root of the problem seems to be a heck of a lot more complicated. The unspent fund problem plagued Oakland before Statham and her trips to Maryland. In fact, Statham inherited a huge fund balance (including $18m in restricted program funds – See Row 45) when she came on board, according to an OUSD analysis.

Here’s another bizarre fact to consider:  According to the analysis, the district received $13.45 million from the state at the end of the school year, with little time to spend it.

Oh, and another thing: The $40-plus million surplus Gammon reported seems to include a $9.2 million reserve that the district is required by the state to keep for emergencies (See Row 33).

A question for you all: Why is it so difficult for a district sorely in need of funds to spend what it has?

Katy Murphy

Education reporter for the Oakland Tribune. Contact me at kmurphy@bayareanewsgroup.com.

  • http://ibabuzz.com?education Steve Weinberg

    Katy, you are right to point out that the situation is much more complex than blaming the State Administrator. There are many reasons why funds don’t always get spent in the year they are received. First of all, education is a labor intensive operation. The best use of funds is for people, but some of our funds do not come at times when it is possible to add additional teachers or other staff members. If schools knew their total budgets for the coming year the preceding Spring, money would be better spent and there would be a smaller year-end surplus. Unfortunately, it is impossible for schools to get this information, because the state budget, which provides most of the money for the district, is not completed until the summer. Barak Ben-Gal, who used to run the RBB program for the district, said that the only cure would be if the state passed two-year budgets as some other states do. I would like to see the state budget be subject to only a majority vote, so a small minority cannot delay it, as happened this summer.
    Sometimes the state compounds this problem by holding onto some of the funds promised to schools until late in the year. That happened this year.
    Oakland further complicates matters with its site-based budgeting. I manage the accounts for my school, and I have to review an 86-page budget at least weekly, and sometimes daily. Each page in the budget has its own set of rules about what that money can be used for. When we want to spend money it has to be in the proper account, and many of the budget pages have more than 20 accounts on them. For a simple field trip we need to pay for the bus out of one account, the admissions out of another, and the substitute teacher who stays at the school from a third. It takes several days to several weeks to transfer money from one account to another, and sometimes the budget office will not allow transfers from certain accounts because they are auditing them. The deadline for transferring funds is in April so you need to have funds in many accounts in case you need to pay for something from them after April, and so when the year ends there is often money left.
    Sometimes schools want to have a surplus because they can carry the money over into the next year when it can be better spent. Last year my school lost a grant that was providing $300,000 a year to the school. In the final year of the grant we saved about $60,000 so we would not have to eliminate an effective program the next year.
    Last year the district tried to improve the accuracy of their allocation of funds by double- and triple-checking the enrollment for each school. Unfortunately that resulted in some funds not being distributed to the schools until January, too late to be spent effectively. Already this year the district has missed its first promised date for providing last year’s surplus funds to the sites.
    I think the district could do a better job of making funds available to schools earlier. The budget department doesn’t have to wait until they have exact enrollment figures to make most of the money available. They could release 75% and hold the rest as reserve until enrollment counts were final. They also could load projected surpluses into RBB so they could be allocated in the Spring for the next year.
    This isn’t a problem with one easy solution, but any improvements would benefit the school sites.

  • Jim Mordecai

    The point that Steve Weinberg makes about the financial situation being complex is true for most districts but doubly true in Oakland. The piece by Mr. Gammon is an attack piece that is not intended to be fair and balanced but contains a truth that money not spent for allocated educational services to students with great needs is like the concept of justice delayed being an injustice.

    But as Mr. Weinberg points out carrying money over might save an outstanding program and be in the best interest of students.

    His point about a two year budget should be supported by contacting Oakland’s State legislators and calling on them to initiate some legislation to restore some common sense to the education budgeting process.

    And, I would certainly welcome the day when an initiative requires a majority vote for passage of the budget.

  • turner

    A question for you all: Why is it so difficult for a district sorely in need of funds to spend what it has?


    The managers are all scared about making spending decisions. They know how much they will receive from the state but they don’t put in a spending plan until the money comes in. When it comes in too late, they don’t spend it that fiscal year.

    A major problem that OUSD faces but no one ever talks about is how much restricted money is returned to the government for non-use.

    It’s really sad: a school district that has trouble generating money does not spend the money it receives anyway. If you look at the books for the past 5 years, you will see that there have been HUGE restricted balances carried over.

    It’s a travesty!

  • Caroline

    A San Francisco school board member compared these restricted funds to large amounts of money that you are required to spend on new window curtains whether you need them or not, but can’t spend on the new roof that your house desperately needs.

  • turner

    “In the meantime, the state Schools Superintendent needs to hire someone who lives in the East Bay to run Oakland’s schools. Either that, or return the district to local control so that the school board can finally recruit a new superintendent who knows how to manage money. “Robert Gammon

    I’m glad to see I’m not the only one advocating for someone local to take over the reins of the district!

  • http://wwwstatic.kern.org/gems/fcmat/CALIFORNIASTATELOANSTOSCHOOL.pdf Pat Hudson

    If anyone has the time, energy and expertise here is the budget submitted in June,2006
    for the 2006/07 budget year. Most lay people and journalists do not understand terms
    like Unrestricted and Restricted Funds, Carryover and such. For a district that still owes
    the State over $90 million and can not balance its annual budget it is a gross
    misrepresentation to state that OUSD did not spend $40 million last year.


  • turner

    That’s not the right one. Here’s the link to the 2007 Fiscal year that just ended.


    It shows an ending balance of $17 million in unrestricted funds and $26 million in restricted funds. Unrestricted means the money can be used to fund any district operation. Restricted means it can only be used for the categorical uses it was awarded for in the first place.

    $43 million…yet the district is broke! Astounding!